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Ofcom temporarily suspends MOD spectrum auction

Ofcom has put the auction of a tranche of the 2.3GHz and 3.4GHz spectrum bands on hold due to the ongoing uncertainty over the future of the UK’s mobile operators

Ofcom has temporarily suspended the planned auction of a tranche of spectrum currently owned by the Ministry of Defence (MOD) while it waits for more concrete decisions on the proposed mergers of BT and EE, and O2 and Three from the Competition and Markets Authority (CMA) and European Commission (EC) respectively.

The regulator had hoped to start the auction process before Christmas 2015. However, in a statement put out today (Thursday 3 December 2015), Ofcom said that, since the publication of the CMA’s preliminary verdict approving the merger of BT and EE, and the EC’s announcement that it would launch an in-depth probe of the concurrent acquisition of O2 and Three, it had decided, “for reasons of good public administration”, to delay the process.

Additionally, said Ofcom, O2 parent Telefónica UK and Three’s parent Hutchison 3G UK had stated their intent to bring judicial review proceedings against its decision to start the auction before the EC gave them its blessing, or not.

“Ofcom will not now commence the auction process until the European Commission has taken its decision as to whether the proposed merger between Telefónica UK Limited and Hutchison 3G UK Limited is compatible with the common market,” said an Ofcom spokesperson.

Ofcom will almost certainly put the process on hold for several months in anticipation of a full verdict, because while the CMA expects to rule on BT and EE in January 2016, Brussels is unlikely to hand down its opinion on the O2 – Three acquisition before May 2016.

The auction of 190Mhz of spectrum – equivalent to 75% of the total spectrum awarded for 4G mobile networks – in the 2.3 and 3.4GHz bands was first put on the table in 2012 as a revenue-generating exercise by the coalition government, as it sought to pay down the deficit. However, the date of the auction – originally planned for 2014 – has slipped a number of times since then.

The 2.3GHz and 3.4GHz bands are particularly attractive for the supply of mobile broadband services, because they can carry a lot more data, and are already in use in a number of countries for this purpose.

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